In March, the The US House of Representatives overwhelmingly passed a bill that could force ByteDance to ditch TikTok or face ban on US app stores METROMuch of the discussion and debate related. has focused on the United States data security and expression rightsBut one potential move also highlights something else: TikTok is increasing its focus on e-commerce, but the interplay between tech giants and geopolitics is squeezing smaller merchants.
In recent months, traders (many of them from China) seeking a amazon Alternatives have flocked to TikTok to sell clothing, cosmetics, electronics and a variety of other products to American shoppers, through TikTok shop. In interviews with TechCrunch, sellers in Shenzhen (the Chinese megacity that is a major hub for amazon merchants) said they felt a collective sense of frustration over rising geopolitical tensions and “helplessness” over a potential TikTok ban.
“The situation is not under our control,” a retailer specializing in maternity and baby products told TechCrunch. “It's just hard to know how things will play out.” Since existing supply chains are difficult to change, “we just have to play it by ear.” (The vendors asked not to be identified due to political sensitivities.)
TikTok shop officially launched in September 2023 and already has 200,000 merchants. But it has not since provided updated figures on how many merchants there are currently on the platform, nor how much they sell there, nor how many sell elsewhere (and where else it might be).
amazon-seller-report/” target=”_blank” rel=”noopener”>Investigation However, from Jungle Scout, a data intelligence provider for amazon, provides insight into TikTok's impact on e-commerce. He found that 20% of amazon sellers, brands and businesses have plans to expand to TikTok shop this year. Before the current political backlash took off, ByteDance amazon-s-turf” target=”_blank” rel=”noopener”>reportedly projected it had the potential to grow its U.S. e-commerce business tenfold to $17.5 billion this year.
TikTok isn't the only platform on the list for merchants looking for more channels beyond amazon to expand their customer bases. Its rise is part of a larger shift we've been seeing around alternative marketplaces like Temu, which are attracting more attention not only from buyers but also from Chinese exporters and e-commerce merchants. And amazon is supposedly taking noteanother sign that alternatives are gaining ground.
TikTok did not immediately respond to a request for comment.
A new way to sell and buy
TikTok has been trying to boost its e-commerce business since launching in the United States last September.
The app is famous (or infamous, depending on who you talk to) for how it strictly controls what content is shown to whom. TikTok shop also has a strong dose of curation.
Unlike Temu, known for its seas of cheap, white-label products from Chinese factories sold directly to American consumers, TikTok's strategy has been to incorporate and highlight more brand-name products, making it a more direct competitor to amazon.
TikTok is also looking to attract sellers with more traditional subsidies. To encourage merchants to sell products at deep discounts during the most recent Black Friday sales period, TikTok reportedly gave subsidies to those merchants to lower their prices in amazon-walmart” target=”_blank” rel=”noopener”>as much as 50%.
Incentives and algorithms aside, merchants have been interested in selling on the app simply because TikTok's short video platform generates massive engagement. According to a survey of tabulatedA Chinese company that tracks TikTok store performance, nearly 70% of sellers reported an increase in sales year-over-year during the first 11 months of 2023.
This is also confirmed by consumer behavior, where influencer-endorsed products continue to gain traction, especially among coveted younger consumers.
According to Jungle Scout, nearly 20% of consumers started searching for products on TikTok in the first quarter of 2023, up 44% from a year ago. While 56% of all consumers still preferred to start their product search on amazon, 40% of Gen Z preferred TikTok for searching over Google.
The large concentration of young buyers is not surprising, given that 52% of TikTok users in the US are between 18 and 34 years old, according to Bank investigation. TikTok has the opportunity to reshape the way America's younger generations shop online.
In addition to leaning into its dynamic, TikTok has been doing some pretty simple media spins to spread its message.
Earlier this month, business research firm Oxford Economics published a report on TikTok's impact on the US SMB sector. It was funded by TikTok and, perhaps unsurprisingly, provided a ringing endorsement of TikTok's economic impact: it estimated that a presence on the platform (via advertising or simply marketing through accounts) generated $14.7 billion in revenue for the 7 million SMBs in the US that use it.
amazon challenger?
TikTok appears to be serious about venturing into e-commerce, but it's still in flux. On the one hand, the company (although facing a possible ban or forced sale in the US) continues to roll out new e-commerce features, such as a tech-news/tiktok-pitches-new-ad-formats-it-faces-us-ban-threat/2547426″ target=”_blank” rel=”noopener”>new video shopping format he presented it at a conference this month. On the other hand, he's modifying or enforcing seller policies seemingly on the fly while trying to figure out how to grow under a particularly glaring spotlight.
“The internal management of TikTok (Store) is a bit chaotic at the moment. It’s a new platform, so it hasn’t started putting pressure on sellers, but its policies are still changing,” said a lamp-selling merchant, who has been selling on amazon since the mid-2010s.
One of those policies appears to be related to what their algorithms show each consumer. Merchants outside China say that in recent months, TikTok shop in the US has stepped up efforts to prioritize American stores over foreign ones. Sellers tell TechCrunch that this has led to the rise of black market “agents” – parties that broker deals between foreign sellers and US residents, who in turn create TikTok stores that appear to be US-owned but are actually run by foreign merchants.
Merchants are willing to overcome these obstacles to increase their touchpoints with users and diversify their channels as one giant after another emerges.
“The margins on amazon are getting tighter and the competition is getting fiercer thanks to Temu, so TikTok gives us another option,” said the lamp seller.
To measure TikTok's impact on amazon, “we need to understand the overall retail market in the US,” said Richard Xu, a partner at Starting Gate Fund, which invests in cross-border retail solutions between China and the US.
Electronic commerce comprises around fifteen% of American retail trade, according to the Department of Commerce, so “If we talk only about the small proportion of the online e-commerce sector, there is not much to discuss,” Xu suggested.
But if TikTok shop's strategy is primarily focused on bringing offline businesses online for the first time, that could be a very big step. “(Using) live streaming e-commerce to allow small shops and offline businesses to participate, the potential is quite significant.”
In any case, while 15% seems small, the figure is still substantial ($285.2 billion), so TikTok shop's potential is huge even if it only gets a small slice of the existing e-commerce pie.
Juozas Kaziukenas, founder of Marketplace Pulse, an e-commerce intelligence company, doubts TikTok will ever replace amazon. “It doesn't have broad selection and fulfillment, and shoppers in the West are used to search-based e-commerce,” he said. “But many people spend many hours using TikTok every day, so sometimes they buy things on it.”
“In the United States and other Western countries, shopping apps have developed in parallel with apps that provide entertainment or connection, such as social media. “We get used to getting different things from different apps, instead of going to one place to have them all,” he added.
“Today, social apps like TikTok are trying to discover shopping before retailers like amazon catch on to social media (such as through amazon Inspire). But the status quo of different apps serving different needs persists.”
